Small and medium-sized enterprises (SMEs) often rely on a small group of senior decision-makers, yet entrepreneurial competency research commonly treats opportunity, relationship, conceptual, and strategic competencies as parallel predictors. This obscures how managerial competence is converted into firm-level innovation outcomes. This conceptual paper develops a capability-conversion framework explaining how these competencies support business model innovation (BMI) and innovation performance. Drawing on Dynamic Capabilities Theory, managerial microfoundations, and Contingency Theory, the framework presents an ordered but recursive process. Opportunity competencies identify commercially relevant changes; relationship competencies provide access to external information and complementary resources; conceptual competencies transform these inputs into alternative business-model configurations; and strategic competencies support their evaluation, selection, resource alignment, and implementation. Their complementary operation enables BMI through the reconfiguration of value creation, delivery, and capture. BMI, in turn, supports innovation performance, while environmental uncertainty is proposed to strengthen this relationship. Seven propositions specify the input, conversion, implementation, complementarity, outcome, and boundary roles in the process. The framework clarifies distinct competency functions, explains their managerial-to-firm-level conversion through BMI, and provides SME owner-managers, support organisations, and policymakers with a basis for diagnosing capability bottlenecks and targeting interventions.
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